The Medicare Modernization Act of 2003 (MMA) mandated substantial reductions in payment rates for outpatient chemotherapy drugs. The MMA's changes, which took effect on January 1, 2005, capped the margins providers receive on oncology drugs at 6 percent above manufacturers'average (national) sales prices. At the same time, Medicare increased the fees for chemotherapy administration. This study will build on our analysis of the overall effects of the MMA on chemotherapy treatment for Medicare beneficiaries with lung and colorectal cancer. In work we recently submitted for publication, we found that doctors responded to the MMA's payment changes by providing chemotherapy treatment to a greater share of Medicare beneficiaries with lung cancer (Jacobson et al. 2009). The type of agents administered to patients also changed. Previously high margin drugs were used less commonly than prior to the payment reduction and more expensive agents were increasingly, if modestly, favored by the 6 percent margin imposed on all drugs. Our analysis of beneficiaries with colorectal cancer is ongoing, although we suspect we will find similar results. The goal of this study is to understand how the large change in payment rates for cancer drugs has affected disparities in cancer treatment. Using data on the Surveillance Epidemiology and End Results (SEER) Program linked to Medicare claims for beneficiaries diagnosed with lung and colorectal cancer between 2003 and 2006 and all associated claims for these individuals from 2002 to 2008, we plan to extend our recently completed work on lung cancer and ongoing work on colorectal cancer to understand if the MMA-related changes in treatment are concentrated disproportionately in some groups of Medicare beneficiaries rather than others and if, as a result, existing disparities widen as a result of the payment reform. The proposed study aims to analyze: Aim 1) how the MMA's changes in payment rates for cancer drugs has affected disparities in cancer chemotherapy treatment for beneficiaries with colorectal and lung cancer. Aim 2) how the MMA's changes in payment rates has affected disparities in the type of drugs administered to those patients who receive any chemotherapy treatment. Aim 3) how the MMA's changes in payment rates has affected disparities in survival for beneficiaries with colorectal and lung cancer Our proposed work would be among the very few studies of the effects of payment reforms on changes in disparities. Moreover, it would be the first, to our knowledge, that seeks to specifically understand how the MMA differentially affected chemotherapy treatment and outcomes across demographic and geographic groups. PUBLIC HEALTH RELEVANCE: The Medicare Modernization Act of 2003 (MMA) mandated substantial reductions in payment rates for outpatient chemotherapy drugs. In work recently submitted, we find that in response the MMA's payment change, Medicare beneficiaries with lung cancer are more likely to receive chemotherapy treatment and, conditional on such treatment, are more likely to receive expensive agents. The goal of the proposed study is to determine how, if at all, these changes have affected disparities in chemotherapy treatment and outcomes.